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Why Celldex Rallied 22% In November

The aspiring drug developer closed on an acquisition and updated investors on its clinical trial progress last month.

What happened

After announcing the acquisition of the privately held Kolltan and reporting third-quarter financials, shares in Celldex Therapeutics(NASDAQ:CLDX) jumped 22% last month, according to S&P Global Market Intelligence.

So what

Among the interesting biologics Celldex is acquiring are KTN0158, a monoclonal antibody that inhibitors KIT activation and receptor dimerization in tumor cells and mast cells, and KTN3379, a monoclonal antibody designed to block the activity of ErbB3 (HER3). KTN0158 is currently in a Phase 1 dose escalation study in refractory gastrointestinal stromal tumors, and KTN3379 recently completed a Phase 1b study for use alongside Erbitux in refractory head and neck squamous cell carcinoma and BRAF-mutant non-small cell lung cancer.

Celldex also updated investors on its financials and clinical trial progress early last month.

The company's third-quarter operating expenses were $32.2 million and its net loss was roughly $30 million. Celldex finished September with $203 million in cash and equivalents, down from $220 million in June, and $16.2 million in long-term liabilities. Management expects that cash on hand and money that can be raised via an existing stock issue plan can fund operations through 2018.

Celldex's lead product candidate, glembatumumab vedotin, continues to enroll patients with metastatic triple negative breast cancer over-expressing gpNMB in a phase 2b study. Management reports enrollment in this trial has accelerated and they expect to provide an updated target for completing trial enrollment early next year.

Management also reminded investors that they had reported data from a phase 2 study of glemba in checkpoint-refractory metastatic melanoma last quarter. The study met its primary overall response endpoint, and they're now enrolling patients to evaluate glemba in combination with other therapies, including Celldex's varlilumab and commonly prescribed checkpoint inhibitors.

Now what

Celldex's investors took a big hit earlier this year when Rintega failed in a phase 3 brain cancer trial. Now, shares could be finding their footing as investors model for opportunities associated with other potential treatments that are making their way through Celldex's pipeline.

Celldex's firm financial footing, and the potential for pipeline data over the next year or two, makes this stock intriguing. However, Celldex's focus is on oncology, and historically, 93% of cancer trials fail in clinical studies. Therefore, Celldex is a high risk/high reward stock that's best left to aggressive investors able to withstand additional future trial failures.

Todd Campbell owns shares of Celldex Therapeutics. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned.Like this article? Follow him on Twitter where he goes by the handle @ebcapitalto see more articles like this.

The Motley Fool recommends Celldex Therapeutics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Author

Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In 2003, Todd founded E.B. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Todd has provided insight to a variety of publications, including SmartMoney, Barron's, and CNN/fn.
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